Wednesday, May 04, 2016

Abbott's 'zombies' add billions to Malcolm TurnBULL's budget

Peter Martin

The first Turnbull budget will be propped up by about $13 billion of so-called "zombie measures", which are still on the books from the first and second Abbott budgets but have not yet been passed by the Senate.

A parliamentary budget office count for the coming financial year puts the "ghost" measures at $1.7 billion. The biggest are the $600 million from planned cuts to access to Family Tax Benefits, $258 million from the outlawing of alleged double-dipping of maternity leave schemes, and $139 million from increasing co-payments and changing the safety net for the Pharmaceutical Benefits Scheme.

By 2019-20 the Family Tax Benefit cutbacks are booked to have saved the budget $6.3 billion, with the outlawing of double-dipping saving $1.3 billion, and changes to the Pharmaceutical Benefits Scheme $1.2 billion.

In total, the 25 unlegislated measures are on the budget books as saving $13.3 billion over the four years to 2019-20, even though none will be able to start as scheduled on July 1.

With the Senate due to meet for only two days after the budget, the earliest the measures could become law is August, should a returned Malcolm Turnbull be able to muster the numbers in the new Senate to get them through. None will be presented to the joint sitting of Parliament due immediately after the election.

"Implicitly, all of those measures remain contained within the budget until they are explicitly removed," an official familiar with the process said.

Other measures carried over from the first and second Abbott budgets include lifting the age of eligibility for Newstart payments, imposing an extra one-week waiting period on all working-age payments, tightening access to the Medicare Safety Net, and lifting the age pension qualifying age to 70.

The practice of keeping half-dead measures alive in the budget estimates means that unless the measures get through Parliament, the next four budget deficits will be an average of $3.3 billion worse than projected.

The budget might also count as real some of the $80 billion in savings over 10 years the Abbott government claimed to make by more slowly increasing grants to the states for schools and hospitals.

Although Mr Turnbull relented and granted extra money for both schools and hospitals before the cuts were due to begin, the extra funding applies for only the three years, meaning some of the ghost savings might still show up in the budget's long-term projections.

Another Abbott measure that will help the Turnbull budget from beyond the grave will be Treasurer Joe Hockey's investment of $8.8 billion in the Reserve Bank's reserve fund, a payment delivered before the end of the 2013-14 financial year, where it could be presented as adding to the final "Labor" deficit rather than the first Coalition deficit.

Since then the Australian dollar has dived from about US90¢ to US76¢, boosting the value of the Treasurer's investment by about $1 billion.

The Reserve Bank is expected to pay the government a larger than usual dividend of about $2 billion, which will go straight through to the bottom line.

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